Wednesday 26, September 2018 by Bloomberg

Ghana targets $10 billion century bond sale by end of year


Ghana’s Finance Minister Ken Ofori-Atta said the country is preparing to sell $5 billion to $10 billion in century bonds by the end of the year at a time when rising US rates are making investors wary of emerging-market debt.

In what will be the world’s biggest sovereign issuance of 100-year securities and the first by an African country should the deal proceed, Ghana is planning to raise the debt as the first tranche of a $50 billion bond, Ofori-Atta said in an interview Tuesday in the capital, Accra. The $50 billion will be raised “in bits” through a shelf offering, which allows issuers to a register a security without selling the entire issue at once, said Ofori-Atta.

The sale will help Ghana to pay off existing debt, build factories and overcome an estimated shortfall of $7 billion in annual infrastructure spending, said Ofori-Atta. More detail about the bond will be made public when he presents the country’s budget for 2019 to lawmakers on 15 November, said Ofori-Atta.

Ghana’s issuance plan comes at a time when emerging-market dollar-bond sales are dwindling as rising US rates dampen investor appetite for high-yielding assets. Average yields on emerging-market dollar debt have climbed almost 100 basis points since April amid a sell-off sparked by crises in Argentina and Turkey, according to Bloomberg indexes.

Only China, Argentina and Mexico have previously issued 100-year dollar debt, of which Mexico’s $2.7 billion deal in October 2010 was the biggest.

“It sounds optimistic,” Kieran Curtis, a money manager in London at Aberdeen Standard Investments, which owns Ghanaian bonds, said by phone. “It’s difficult to believe there is $10 billion of demand out there. This would be outside what you’d expect for their financing needs.”

Yields on Ghana’s 2049 dollar bonds rose three basis points to 8.63 per cent at 6.37 p.m. in London on Tuesday, the most in a week.

An issuance by year-end will be Ghana’s second sale of Eurobonds in 2018 after raising $2 billion in 10- and 30-year securities in May. Earlier this year, the country weighed selling so-called Panda bonds in mainland China and Samurai notes in Japan before abandoning the idea.

Ghana is in the final year of an almost $1 billion bailout programme with the International Monetary Fund that started in 2015 after the value of the cedi collapsed and debt ballooned. Total public debt measured 65.9 per cent of gross domestic product at the end of July, compared with 67.4 per cent at the same time in 2017, according to the central bank’s data.

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